Cuts, overdrafts and closures: Business becoming ‘impossible’ for contractors

Seven in ten (70%) contractors reported a drop in the profitability of their pharmacy in 2023, according to the results of the C+D Salary Survey.

In a total cohort of 58 respondent contractors, 43% reported their monthly wholesaler bills were “regularly” more than their NHS payments.

Contractors said that they were losing money from “excessive medicines prices”, with 53% of respondents saying they lost between £1,000-£5,000 per month.

Almost a quarter (24%) reported losses between £5,000 and £10,000, while 23% reported losses of more than £10,000.

The financial pressures led 34% of respondents to say one or more of their pharmacies were “at risk” of closing in the coming year, while 15% said they had sold or closed one of their pharmacies in the past 12 months.

One told C+D that “drastic cuts” were in the offing to “stay afloat” unless core funding rose “in the very near future”.

Income issues

With their pharmacies’ profits taking a hit, many contractors reported troubles with their own income from their businesses.

Some 45% of respondents told C+D their income had decreased, with 32% saying it had “stayed the same” and just 23% reporting an increase in personal income.

The largest share of responding pharmacy contractors (43%) reported personal incomes from their business of between £25,000 and £50,000, while 25% reported income between £50,000 and £75,000.

Just 11% of contractors reported personal incomes in excess of £100,000.

Of those reporting that their incomes had decreased over the year, 42% said that it had declined by more than 21%.

Unsurprisingly, 69% of contractors told C+D that they were dissatisfied with their personal income from their pharmacy business.

“The profitability of the business has reduced, the stress levels are sky high… pharmacy life is really difficult,” one contractor said.

“Cut back on holidays”

Meanwhile, just 28% of contractors said that they had not made any personal financial adjustments over the course of the year.

Four in ten (40%) respondents said that they had to “cut back on holidays” and 17% said that they took out or extended a loan.

Many contractors also reported changes to their overdraft arrangements - 30% extended their existing overdraft and 11% either opened an initial or additional overdraft facility.

Pharmacy contractors were also asked whether they had made any “cutbacks” over the course of the year.

Of the 39 contractors that responded to the question, 62% said that they had reduced their own pay, 56% said they had either reduced locum rates or had used less locum cover and 49% said that they had “postponed investment plans”.

Just 5% said that they had made no adjustments.

One contractor told C+D that they were just “trying to make ends meet with all [their] costs rising and cash flow getting worse”.

Blame game

When the contractors who were dissatisfied with their pharmacy income were asked who they thought was to blame, 76% said that it was the government’s fault due to lack of funding.

And most contractors (57%) said that “cuts to pharmacy funding” was the biggest threat to their business.

Community pharmacy is “slowly being destroyed by the government”, one contractor said.

Another added that without more funding, the financial and workload pressures were making it “impossible to continue”.

“Community Pharmacy is in real trouble,” contractors said. “Help [is] badly needed.”

Earlier this month, C+D’s Salary Survey revealed that pharmacy owners are crushed by work and high levels of stress with more than four in ten contractors wanting out of the profession.

The C+D Salary Survey 2023 ran between October 27 2023 and January 8 2024 and was completed by a total of 1,261 pharmacists and pharmacy staff.

See all the coverage so far on the C+D Salary Survey hub.